The market for going public has cooled, resulting in Minnesota losing more public companies than it has gained in the past year.
And it looks like the initial public offering market will remain depressed.
While Minnesota this spring gained a new company in Solventum Corp., 3M's health care spinoff, the state now has 73 companies trading on major stock markets, down from 77 a year ago.
And it doesn't look like Minnesota will be adding any new public companies through an initial public offering soon: There are currently no Minnesota companies in the registration process.
That's a different story than in 2020 and 2021, when the state added 10 new public companies, reversing a more than decadelong decline in Minnesota's roster. The list will get even shorter should Duluth-based Allete go private after it recently announced a deal with Canada's pension board. Allete is ranked 29th on this year's list.
Volatility and concerns about rates have shaken markets in recent weeks slowing the pricing of new offerings, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused exchange-traded funds.
"At this point, we're still optimistic that IPO activity will continue to build through the rest of the second quarter, even if that gradual pickup we've been expecting is slower than originally anticipated," said Avery Marquez, an assistant portfolio manager at Renaissance Capital.
The last traditional IPO for a Minnesota company was in December 2021.
Minnesota has gained a few public companies since them, but they haven't been through typical IPOs.
Comings and goings
Solventum spun off from 3M Co. in April, too late to be eligible for this year's Star Tribune 50, and it's unknown whether it will be on the list next year. While its temporary headquarters is on 3M's Maplewood campus, it will eventually move its headquarters. Speculation on a location centers on Texas, which is home to the largest part of Solventum's business.
While Envoy Medical became a public company in October, it was through a merger with a special purpose acquisition company, or SPAC, a firm with no operations that goes public and then acquires existing companies.
Leaving the list is Cardiovascular Systems, which was acquired by Abbott Laboratories on April 27, 2023, in a deal valued at $850 million. That was Abbott's largest acquisition since 2016, the year it acquired another Minnesota company, St. Jude Medical, for $30 billion. Cardiovascular was just off the list last year, weighing in at No. 55 among public companies run from the state.
Surmodics, No. 57 among Minnesota's companies with annual revenue of $132.6 million, is being acquired by a Chicago-based private equity firm GTCR for $627 millioWn. The deal was announced Wednesday and is expected to close this year.
Agiliti Inc. is in its last year on the list. The company finished last year as a public company but on May 7 its largest shareholder, the private-equity firm Thomas H. Lee Partners, took Agiliti private by acquiring the shares it did not own.
Mixed results for newly public
How are the recently minted public companies doing? The answer is mixed.
The most successful of the group may be Minneapolis-based Sezzle. The fintech payments company became a public company a while ago when it started trading on the Australia exchange. In 2023, it moved its main listing to Nasdaq.
While it is growing quickly, its revenue is still too low to make it onto the Star Tribune 50 list of the largest public companies in Minnesota. It ranked 55th on this year's list, with revenue of $160 million, up 27% over last year.
Others in Minnesota's class of new public companies have not fared as well. Five of the 10 companies that went public in 2020 and 2021 are not, or will be no longer be, trading on the markets. The remaining companies are trading below their IPO offering prices.
- Fresh Vine Wine was the last to complete an IPO in December 2021. But the company failed to take off and announced plans in January for Notes Live to acquire it by the end of June.
- Bright Health Group made the Star Tribune 50 this year, but it will be the last year on the list. In 2021, it had the largest ever IPO by a Minnesota-based public company but not once did its shares close above its $18 a share offering price. The company failed in its intended main health insurance business and has transitioned to its clinical care business. At the beginning of this year, it changed its name to NeueHealth and moved its headquarters to Doral, Fla.
- Autoscope Technologies Corp. in Minneapolis, otherwise known as Image Sensing Systems, saw its stock delisted last year. The shares shifted to an over-the-counter market and Autoscope also deregistered as a public company.
- Chaska-based Lifecore Biomedical returned to the public markets in 2022. The life-sciences and pharmaceutical company went public when it merged with an existing public company, Landec Corp, keeping the Lifecore name. It has since run into a host of problems and recently completed a year-long strategic review process that didn't identify a compelling option.
- Foxo Technologies and White Bear Lake-based Envoy Medical each went public through a merger with a SPAC company in September of 2022 and October of 2023 respectively. Foxo has faced a litany of problems since its merger and Envoy Medical's share price has been out of tune with the overall market since its debut.
- Calyxt Inc., MiroMatrix Medical, Trean Insurance and Qumu Corp. were all small Minnesota-based public companies that were acquired in 2023. None made the Strib50 list last year.
- Last year, iMedia Brands (aka ValueVision, ShopNBC and EvineLive) went bankrupt and was headed toward possible liquidation when a buyer emerged in the bankruptcy process only to be suddenly outbid by IV Media, a company controlled by 5-Hour Energy founder Manoj Bhargava.